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Sara Lee Corporation Stock Buy Recommendation Reiterated (SLE)

NEW YORK (
TheStreet)
-- Sara Lee Corporation (NYSE:
SLE) has been reitereated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

The revenue growth came in higher than the industry average of 24.4%. Since the same quarter one year prior, revenues slightly increased by 2.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

SLE's debt-to-equity ratio of 0.99 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.96 is weak.

SARA LEE CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SARA LEE CORP reported lower earnings of $0.51 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.51).

Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Food Products industry. The net income has significantly decreased by 101.3% when compared to the same quarter one year ago, falling from $153.00 million to -$2.00 million.

Sara Lee Corporation engages in the manufacture and marketing of a range of branded packaged meat, bakery, and beverage products worldwide. The company has a P/E ratio of 119.4, below the average food & beverage industry P/E ratio of 507.3and above the S&P 500 P/E ratio of 17.7. Sara Lee has a market cap of $12.04 billion and is part of the
consumer goods sector and
food & beverage industry. Shares are up 8.5% year to date as of the close of trading on Friday.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.